Why are investors piling into technology stocks now?
The tech sector has really had a hangover since the bubble. It has taken us almost ten years to soak up excess fiber build-out, and companies have not spent on technology since everyone upgraded in 1999. Now the infrastructure we have is stretched. So for corporate America to see productivity levels increase, it will have to spend on technology. That’s making the sector very attractive. A lot of funds are still underweight in tech, and valuations are very good for private equity takeouts. These are great growth drivers too. Does that mean we’re headed for another bubble? It’s a different era for technology. There hasn’t been the overspending that we saw in the first boom, or the excess build-out. Tech firms are much more worried about their balance sheets now, so development and capacity are more controlled. You mentioned private equity – do you expect to see more buyouts in the sector? Yes. A lot of small or lesser-known tech companies are finally seeing valuations that are attractive
